30 January 2024
If you are covering Diageo’s latest financial results, please find below a comment from Chris Beckett, head of equity research at Quilter Cheviot:
“Despite the enduring quality of the business, there is no getting away from the fact that these latest numbers are not good from Diageo. Much of the figures out this morning reiterate what was said at its profit warning in November, with sales falling a little further than expected. Latin America continues to be the problem as it struggles to sell its higher end products in that market, while the US is also seeing weakness in the vodka and rum sectors.
“Management has warned that 2024 is likely to be rough for the drinks giant, but it does see a sequential improvement throughout the year and a return to growth in 2025. Ultimately, the business is as positive as it can be given lots of the factors for the declining sales are out of their control – primarily weak consumer demand.
“On the bright side, the long-term trends look intact. Consumers continue to turn to spirits and that shift in behaviour has not fully played out yet. Subsequently, in key, growing markets, such as China and India, sales are growing robustly. While these won’t show up on the profit & Loss statement immediately, there is a narrative in place for Diageo to return to growth and once again provide the reliable growth it has come to be known for over the recent years.”
